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Italy Food and Drink Report Q3 2007
Business Monitor International, Oct 2007, Pages: 68
The Italy Food Drink Report provides independent forecasts and competitive intelligence on Italys food and drink industry.
In August 2007, it was reported that Italian pasta makers were facing a ‘crisis’ in the wake of a 30-40% surge in the price of durum wheat and semolina (durum flour) since the start of 2007. World grain prices have been climbing steadily for much of the past year, pushed upwards by dwindling stocks, which are themselves the result of poor harvests in major grain-producing countries, as well as rising demand from
the biofuel industry, which has resulted in some grain farmers switching their production away from wheat. Fears of a spike in food-price inflation this autumn have been running high in Italy, fuelled by price hikes announced by some pasta and poultry producers. Despite this, Italian Prime Minister Romano Prodi has said that food-inflation worries were not justified.
Nevertheless, at the time of writing, there were signs that both the domestic and export prices of basic foodstuffs were increasing. Italys Barilla, which is the worlds biggest pasta maker, has already raised its prices for bakery products and plans to increase pasta prices in the autumn, in line with many other producers. Italy’s pasta makers’ union, Unipi, has said that further price hikes could threaten the competitiveness of Italian pasta on international markets, dealing a heavy blow to the industry which earmarks 53% of its output for export; grain accounts for more than 50% of the costs of making pasta.
Meanwhile, Italys biggest milling group, Grandi Molini Italiani, has said that it will raise flour prices by more than 50% by the end of this year to offset soaring wheat prices; the company has also said it will cease its exports in order to focus on the domestic market. Rising flour prices, coupled with an expected increase in butter and egg prices, are likely to push up the price of bread, pasta and bakery products even
higher. In September, consumer rights groups urged Italians to boycott pasta, which has become a symbol of protest against rising food prices. The consumer groups have called for the government to proclaim a price emergency and intervene immediately with measures to bring down prices.
Amidst all the news of rising wheat and dairy prices, the past few months have not all been bad news for Italy’s food sector. In August, the Italian National Espresso Institute (INEI) reported that demand for coffee in Italy rose by between 4.5% and 5.0% in 2006, and was expected to continue rising in the years ahead. The main reason for this growth has been the growing success which Italy’s coffee re-export business has experienced in recent months. Imports of green coffee into Italy, which is one of the worlds major roasters, have been steadily increasing, fuelled by growing international demand for roasted Italian coffee. Europe, and especially Germany, where espresso sales have been booming recently, remains the largest re-export market for Italian-roasted coffee. However, potentially huge markets in China and India are now being explored for future growth opportunities, and leading Italian leading coffee roasters, Illy and Lavazza, are already planning to expand into China, India and other fast-growing economies such as Russia.
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